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Report: N.C.’s rural communities more vulnerable to state, federal budget cuts

North Carolina’s rural communities are far more susceptible to the impact of state and federal budget decisions, according to a new report released Friday morning.

Rural counties are significantly less well-positioned their urban counterparts to fund core governmental operations, according to a report by the Budget & Tax Center – a project of the North Carolina Justice Center – particularly during times of austerity budgeting at the state and federal level. They exhibit troubling signs of more widespread economic hardship than urban counties, with a high share of residents living in poverty, without any form of public or private health insurance, and lower overall wealth.

Due to widespread economic hardship, low or negative average population growth, and a higher reliance on intergovernmental revenues, North Carolina’s rural counties are more sensitive to changes in state and federal revenue and expenditure decisions than higher-wealth, faster-growing urban counties, the report said, because they are constrained in the tools, like revenue, available to them. Any decline in external funding to county government during the state’s slow economic recovery could create a budget gap that could directly impact lower-wealth counties. Such a gap would be difficult to bridge without cutting or eliminating local jobs and core services that support the county’s most vulnerable residents.

Local governments play a critical role in the quality of life of individuals and families by delivering public services and investing in community development, but such investments have been declining due to state budget cuts and shrinking tax revenues, the report said. The weakened economic conditions in rural counties will only worsen if state lawmakers continue to take a cuts-only approach to state budgeting.

“Choices made at the state level will continue to impact local communities, and those impacts should be considered when deciding how to move North Carolina forward,” said Brenna Burch, a public policy analyst with the Budget & Tax Center and author of the report. “An adequate, stable and fair revenue system will allow state and local governments alike to meet the needs of individuals and families during both good and bad times, forging a pathway towards greater prosperity for all.”

To read the full BTC REPORT: Tough Times in Small Places, click here.